The Impact of Oil Revenue on Economic Growth in Nigeria (1985-2020)

Dr. Chinonso Tamunowariye
Department of Economics, Ignatius Ajuru University of Education, Faculty of Social Sciences, Rumuolumeni, Rivers state, Nigeria.

Omolua, Roy Oshiokpekhai (Ph.D)
Department of Economics, Ignatius Ajuru University of Education, Faculty of Social Sciences, Rumuolumeni, Rivers state, Nigeria.


This study examined the impact of oil revenue on economic growth in Nigeria from 1985 to 2020. Oil revenue, Exchange rate and inflation rate were used as independent variables while real gross domestic product (RGDP) as dependent variable. Annual time series data on our targeted variables were obtained from secondary sources including the Central Bank of Nigeria annual statistical bulletin, World Bank development indicators (various years). The Eview9 Statistical Software was employed to analyze the data empirically. The Unit root test shows that real gross domestic product, oil revenue and exchange rate variables to be evaluated are all stationary after first deference I(1) while inflation rate was stationary at level I(0). The data were analyzed using the Autoregressive distributed lag (ARDL). From the results of the ARDL estimates it was revealed that among others, exchange rate coefficient has a negative sign only in the short run, oil revenue and inflation rate coefficients impact negatively on real gross domestic product. It was also observed that exchange rate was statistically significant in both the long run and short run while oil revenue was only significant in the short run but inflation rate is not statistically significant at 5% level of significant at both the long run and short run. The study recommended among others that government should formulate appropriate policy that could bring better and judicious use of oil revenue to enhance the growth of the Nigerian economy. All the loopholes to oil revenue generation should be blocked to ensure that fund is properly channel for the growth and development of the economy. Also, government should take proactive and bold steps towards the diversification of the economy in order to encourage the growth of the economy from other sectors of the economy apart from the sole reliance on oil.

Keywords: RGDP, Exchange rate, Petroleum profit tax, Oil revenue, Inflation rate, Nigeria.


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